Saturday, 25 October 2014

The technology of nfc payment hits practical buffers again

Apple Pay is the revolution that NFC was waiting for. Google had Google Wallet and Microsoft had a wallet. However neither set the world on fire.

Google, despite its impact on the online world, was unable to get buy in to its wallet solution. It had some success with a small number of retailers using the technology but the main problem was the market itself. Each bank wanted its own solution, as did MasterCard, Visa and PayPal. In addition the USA still used swipe terminals and signature checks to process payments. This 40 year old process had been replaced by smarter secure 'chip and pin' almost everywhere else on the planet.

Google wallet in action can be seen here. You can't but help notice that the video dates back a few years. Wallet never made it out of the USA because the banks didn't want to give Google a slice of the pie.

Microsoft announced their own Windowsphone wallet in 2012. It wanted to reassure customers that using mobile payments was safe. So it added two barriers to adoption. Firstly you had to use a credit card, debit card or voucher card that supported wallet. Secondly you needed a special 'secure sim' which almost no phone service in the world had or planned to have except a small experiment by Orange in France. Two years on the inevitable result is that no-one is using the Microsoft Wallet.

So Apple have now rolled up with Apple Pay. The unique security propositions is that the payment is made via the transmission of a single use token via NFC. Your credit card or debit card number is never held by the retailer. The phone is secured by a fingerprint reader. Apple kicked off with a long list of retail and banking partners. Surely now a technology company had hit the ground running with an NFC payment system that means you can leave your wallet at home.

Almost. In the first day allegations that Apple Pay was double-debiting cards and causing payments to be made twice. This weekend one of the largest US pharmacies called CVS seems to have switched off NFC all together to stop all touch payments. There is some reporting that CVS pharmacy and a number of other US retailers want into the payments party and want to use their own network. All of them realise the winner in the mobile payments space will make millions. The result of all this competition is that the consumer may be faced with an array on incompatible payment systems for mobile. The only obvious way out may be to use cash. This is where capitalism and greed disadvantage progress and the consumer. Like a mafia boss all these corporations want a percentage of the transaction fees.